The FTSE 100 index fell to a low for the last 12 months today after stock markets around the world plunged into the red overnight amid mounting concerns over the health of the eurozone and the wider global economy, and surrounding the spread of the ebola virus.

Investors dumped shares and other risky assets and piled into gold and government bonds as the euphoria over the prospect of 'lower for longer' interest rates in the US wore off.

The Footsie closed 91.9 points, or 1.4 per cent, down at 6,340- lower than any closing level since October last year - after a fall of 50.39 points yesterday and a dire session on Wall St last night.

The Dow Jones Industrial Average opened 20 points down at 16,639, having produced its worst performance of the year yesterday with a fall of nearly 2 per cent or 345 points to 16,660. It was flat at the time of the London close.

Sell-off: Investors dumped shares and other risky assets and piled into gold and government bonds

In Japan, the Nikkei 225 fell 1.2 per cent to its lowest in two months. Hong Kong's benchmark Hang Seng index lost 335.73 points to 23,198.80.

On the mainland, the Shanghai Composite fell 0.5 per cent to 2,377.76 ahead of Chinese credit data due later in the day. The world oil price meanwhile fell to a four-year low, with Brent crude down $1.65 a barrel to $88.40, a price not seen since November 2010.

The sell-off came amid worries about the global economy, and in particular Germany and the eurozone, as well as mounting geopolitical tensions and the possible impact of the spread of ebola. Analysts warned that more fund managers now believe stock markets have passed their peak.

Speaking at the International Monetary Fund headquarters in Washington, the watchdog's managing director Christine Lagarde said the world faces 'a new mediocre' period where growth is low and uneven.

The comments came just days after the IMF slashed global growth forecasts and declared that while the US and UK are recovering, the eurozone is at risk from recession and deflation.

Going down: The London stock market has had a tough three months.

'In the advanced economies clearly the recovery is driven by the US and the UK, while the euro area and Japan are lagging behind,' she said.

'In the emerging market economies, you have reasonably strong, although slower, growth out of China, better than what we had thought out of India, and clearly a major slowdown in countries like Brazil and Russia. The low-income and developing countries are thriving.

'From a
much smaller base, granted, but their growth rates are very impressive,
which is why it makes the current epidemic, ebola, even more threatening
because it might certainly jeopardise economic recovery that was under
way and entail a decline of those economies that would be wasting the
gains that they have earned.'

George
Osborne said the UK economy is slowing as the crisis in the eurozone
takes its toll while Lagarde said the single currency bloc is at risk
from a Japan-style period of stagnation.

The double
whammy came after figures showed German exports tumbled 5.8 per cent in
August, the biggest fall for more than five years.

It
followed a separate report earlier this week showing German industrial
production slumped 4 per cent in August, also the worst performance
since 2009.

Concerns: IMF managing director Christine Lagarde said the world faces 'a new mediocre' period

Richard Grieveson, an analyst at the Economist Intelligence Unit, described the figures as disastrous and said that 'things may well get worse before they get better'.

He added: 'Germany's ever-growing importance to aggregate eurozone growth indicates that things could get very messy in the bloc in the next few quarters.'

With the FTSE 100 index down 6 per cent since early September, Societe Generale strategist Albert Edwards voiced concerns about the jitters in the market.

He said: 'Institutional investors are getting increasingly nervous that we have reached the end of the road and a major market top may be forming in equities.'

Manoj Ladwa, head of trading at TJM Partners in London, said: 'It's economic factors that are hitting the market. After the IMF downgraded its forecasts a few days ago, the evidence is now mounting that Europe, in particular, is looking weak.'

The IMF warned that interest rate rises are on the way in the US and UK even after the Bank of England froze them again at 0.5 per cent yesterday, and the Federal Reserve hinted on Wednesday that it is in no hurry to hike.

Lagarde insisted that rate hikes in the US could trigger a repeat of last year's 'taper tantrums' when markets swung violently. She said countries should 'prepare themselves for a bit more volatility'.